Working Montanans look to lose out?
| March 19, 2023 12:00 AM
Montana state legislators are grappling with what to do with the state's historic $2.5 billion budget surplus. This surplus is a result of higher than predicted income tax revenues as well as federal legislation that provided billions in funds to states over the last year.
Many good options have been put forth by both political parties on how to best spend the surplus, but another tax break for the wealthiest folks in the state is not one of them.
SB 121, Gov. Greg Gianforte’s tax cut proposal signed March 13, lowers the tax rate on the richest households from 6.5% to 5.9%. That’s a new tax break on top of the ones the Governor gave the same households in 2021, and on top of the Trump tax cuts that also disproportionately benefited the wealthiest families. Montana’s wealthiest 1% - those earning more than 500k/year - would see $6,000 in annual tax breaks on average while folks earning between $43,000 and $67,000/year would see a mere $70/year on average.
The ultra-wealthy already pay amongst the lowest tax rates in the state thanks to our two-tiered tax system that taxes employment income at a higher rate than wealth. Montana’s working families end up paying a higher proportion of their income in taxes than the wealthiest families do. In fact, the growing number of multimillionaires in our state increased their wealth by more than 50% during the first two years of the pandemic without paying any more in taxes.
"Trickle-down" tax breaks for the rich that are supposed to “stimulate” the economy have never worked. Tax breaks for the wealthiest come at a high cost. They help the rich get richer and deepen the unfair divide between the wealthy and the rest of us. They result in lower investments in services that the rest of us need to educate our kids, protect our communities, and take care of our elders -- programs and services that benefit everyone, rather than just the people who already have the most.
Yet once again, this Legislature is proposing handouts to the rich as though more giveaways to upper-income people will somehow help the rest of us get a better education, more affordable healthcare, or higher-paying jobs. SB 121 costs the state more than $180 million in lost revenue annually by year three and then even more moving forward.
Lavishing more breaks on Montana’s rich families won’t help middle-class Montana families afford health care, won’t help seniors who are looking for long-term nursing care as they age, and definitely won’t help the thousands of people who will lose healthcare once the Public Health Emergency expires and Medicaid coverage shrinks.
The governor and the Legislature have a significant opportunity to make wise investments in our state. The state's surplus could be so much better spent on managing wildfires, planning ahead for the aging population, or improving education so the next generation of Montanans is equipped to succeed in the modern economy. Policymakers could choose to level the playing field for hard working families and small businesses, restore some basic fairness in our tax code, make healthcare and housing more affordable, and ensure that working Montanans can get ahead in this uncertain economy.
The Governor and the Legislature need to prioritize these investments over another round of big breaks for the wealthiest. Right now, when Gianforte says he cares about putting money back in Montanans’ pockets, he clearly cares more about some pockets than others.
Tully Olson is the executive director of Big Sky 55+.